The deal

Brazil is set to launch a federal sports betting marketplace after ratifying a new regulatory framework for sports betting and igaming.

Bill PL3626/23 was passed into law by President Luiz Inacio Lula da Silva (Lula) on December 30 after Brazil’s Chamber of Deputies voted to endorse the bill on December 21.

The country’s Ministry of Finance has six months to create the regulatory frameworks.

The ratification ends an impasse of the ‘Betting Law’, which was first created in December 2018 by then-president Michel Temer, after Brazil’s last president, Jair Bolsonaro, withheld his federal sign-off last year due to hardline Catholic resistance to the law.

President Lula’s Workers’ Party then revised the bill before it underwent evaluation by Brazil’s Senate Committees last September. That evaluation led to over 100 amendments before being approved.

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The latest version incorporates a tax on winnings and the inclusion of igaming after initially being removed by the Senate.

The detail

Now enacted, the law is expected to earn the Brazilian federal government more than R$3 billion ($610 million) per year in taxes alone.

Under the law, bettors will have to pay a 15% tax on any winnings above R$2,112, while licensed operators will be charged a 12% tax.

To gain a five-year federal license, businesses will be made to pay R$30 million, which will allow them to operate three brands in the market. However, licenses will be restricted to companies that have their headquarters in Brazil and have a legal guardian based in the country.

The operators must also have a Brazilian board member who will hold at least 20% of the company’s share capital.

Why it matters

While sports betting has not been illegal in Brazil, without a regulatory framework, the market has remained underdeveloped until now.

The law passed will undoubtedly provide a boost to the government’s coffers with the stipulation that companies will have to be based there and pay tax on their income.

The move has seen multiple Brazilian Serie A clubs enter into lucrative sponsorship agreements with sports betting firms, the latest being domestic giants Corinthians, which signed a record shirt sponsorship deal with VideBet earlier this week.

That three-year agreement is worth a total of R$370 million or R$120 million per year- the biggest sponsorship deal in the history of Brazilian soccer. This usurps the record set just last week by Flamengo who agreed a two-year deal with betting platform Pixbet worth R$85 million annually.

Conrad Wiacek, head of analysis and consulting at Sportcal (GlobalData Sport), said: “With the changes in Brazil regarding betting and gambling partnerships, this opens up the avenues for many more deals of the size and scale of Flamengo and Corinthians' new partnerships.

“With Brazilian soccer seemingly under consistent financial pressure, the relaxation of rules in the market will allow clubs to generate significantly higher sponsorship revenue from the betting and gambling sector. Additionally, with the likes of the NFL targeting Brazil next year, and with gambling and betting partnerships legal across a majority of US states, the crossover potential for brands will be significant.

“The timing of this legislation is likely a driver behind the NFL's plans to target the country with its international series next season.”

Further reading

Brazil approves regulatory framework for sports betting